MTBs margins jump as Rs653bn bids accepted

KARACHI: Margins on the short-term government securities increased in the auction held Wednesday.

Banks and financial institutions aggressively participated in the auction of Market Treasury Bills (MTBs) conducted by the State Bank of Pakistan (SBP) on October 7. Overall bids amounting to Rs 785 billion with a realized value of Rs 766.25 billion were received for Sale of 3-month, 6-month and 12-month T-bills.

Most of the bids were received for 3-month tenure. Some Rs 574 billion bids received for 3-month, Rs 145.5 billion for 6-month and bids worth Rs 65.5 billion were submitted for 12-month tenors. The cut-off yield of 3- and 6-month MTBs witnessed upward trend in the auction.

The federal government accepted bids amounting to Rs 653 billion with realized amount of Rs 639 billion as against the target of Rs 600 billion for this auction.

The cut-off yield of 3-month MTBs set at 7.1898 percent, up 6 bps, with accepting bids of Rs 519.316 billion. Some Rs 104.5 billion were borrowed through 6-month short term papers at 7.2189 percent, up 4 percent. Margin on 12-month T-bills was almost flat and an amount of Rs 29 billion were raised at 7.2990 percent.

Similarly, the SBP also conducted auction for the Sale of 03, 05 and 10-Years Pakistan Investment Bond - Floating Rate (PFL) on October 07, 2020 with the settlement date of October 08, 2020. Under this auction the federal government borrowed some Rs 94 billion. It may be mentioned here that the federal government has planned to borrow some Rs 3.69 trillion through sale of government during the second quarter (Oct-Dec) of current fiscal year (FY21). The State Bank has issued four different auction calendars for sale of Pakistan Investment Bond (PIBs), Market Treasury Bills (MTBs), Ijarah Sukuk Variable Rental Rate and Ijarah Sukuk Fixed Rental Rate during second quarter of FY21. As per auction calendars, cumulatively, the federal government is intend to borrow some Rs 3.69 trillion through long term and short term government’s bonds. Some, Rs 1.19 trillion will be raised through sale of long term investment bonds during Oct-Dec 2020. Some Rs 420 billion will be borrowed against PIBs Fixed Rate and Rs 770 billion through PIBs Floating Rate in next three months.

In addition, according to MTBs auction calendar some Rs 2.35 trillion will be borrowed through sale of 3-, 6- and 12-month T-bills in the second quarter of FY21. An amount of Rs 105 billion will be raised through Ijarah Sukuk Variable Rental Rate and some Rs 45 billion against Ijarah Sukuk Fixed Rental Rate in Oct-Dec of 2020.

Copyright Business Recorder, 2020